Managing brands in times of economic downturn: How do luxury brands fare?

Abstract

Spending in virtually every category of non-essential offerings declines during economic downturn. The recent global recession has confronted the luxury goods industry with questions of how well luxury brands do in times of economic downturn, and what kinds of strategies luxury brand managers implement in order to deal with economic asperity. In this article we address the relationship between the performance of luxury brands and the economic cycle, specifically the effect that recessions have on luxury brands, by means of an exploratory qualitative study. We evaluate the luxury goods industry as well as changes within it in recent years. We further consider luxury consumers and the effect the recent recession has had on their behavior, and outline a study of executives within the luxury goods industry designed to capture their impressions of the effects of an economic downturn on the brands they manage. The conclusions and managerial implications of the article afford managers of luxury brands some insight into strategies followed by luxury brands during the recession, as well as some interesting elements of consumer behavior during this time.